10-K 0000764180-26-000017 (2026-02-25) vs 10-K 0000764180-25-000019 (2025-02-26)
| Section | Compared text | Words now | Changed |
|---|
| Risk Factors | Item 1A | 10,039 |
20.6% |
| MD&A | Item 7 | 21,862 |
28.4% |
| Legal Proceedings | Item 3, via Note 18 – Contingencies | 11,289 |
27.2% |
| Accounting Policies | Item 8, Note 2 – Summary of Significant Accounting Policies | 3,533 |
38.8% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Legal Proceedings 339 words changed in this paragraph; it is 47% similar to last year's version.
As described in Notes 2 and 6 4 to the consolidated financial statements, the Company’s Skoal trademark had a carrying value of $3.6 billion Company's goodwill balance was $5,787 million as of December 31, 2024. 2025, and the goodwill associated with the e-vapor reporting unit was $610 million. Management conducts an annual review of indefinite-lived intangible assets goodwill for potential impairment, impairment as of October 1 of each year, and more frequently if an event occurs or circumstances change that would require management to perform an interim review. If the carrying value of a reporting unit that includes goodwill exceeds its fair value, which is determined using discounted cash flows, goodwill is considered impaired. In January 2025, the U.S. International Trade Commission (“ITC”) issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States, which became effective on March 31, 2025. As a result, in connection with the preparation of the Company’s financial statements for the interim period ended June 30, 2024, March 31, 2025, management evaluated the accelerated growth of innovative tobacco products, including oral nicotine pouches, and the related increase in competitive activity among tobacco categories, which have contributed to reductions in sales volumes for Moist Smokeless Tobacco products, including Skoal. Management concluded that the expected impact from the sales volume declines on the Skoal trademark represented a triggering event had occurred and performed an interim impairment assessment assessment. Management recorded a goodwill impairment of $873 million during the first quarter of 2025. During the fourth quarter of 2025, management evaluated the current enforcement environment against illicit flavored disposable e-vapor products and deemed any effective enforcement would likely occur gradually over a longer period of time. Management performed the annual impairment test of goodwill as of June 30, 2024. Management determined October 1, 2025. The annual test indicated that the estimated fair value of the Skoal trademark as of June 30, 2024 e-vapor reporting unit was below its carrying value and recorded an value, resulting in a goodwill impairment of $354 million during the second quarter of 2024. Management’s annual impairment test of indefinite-lived intangible assets as of October 1, 2024 resulted in no impairment charge. $285 million. Management used an income approach to estimate the fair value values of the Skoal trademark. The income approach reflects the Company’s reporting units, discounting of expected future cash flows at a rate of return that incorporates reflecting the risk-free rate for the use of those funds, the expected rate of inflation and the risks associated with realizing expected future cash flows. Management’s cash flows were based on a range of scenarios that consider certain potential regulatory and market outcomes. In performing the 2024 valuation, management’s discounted cash flow analysis for analyses, management made various judgments, estimates and assumptions, the Skoal trademark included most significant judgments and assumptions related to of which were volume, price, revenue, income, operating margins, scenario weightings, perpetual growth rate and discount rate. rates.
Source: Item 3, via Note 18 – Contingencies, 10-K 0000764180-26-000017 vs Item 3, via Note 20 – Contingencies, 10-K 0000764180-25-000019
Risk Factors 231 words changed in this paragraph; it is 41% similar to last year's version.
We may not be able to realize the expected benefits of our acquisition of NJOY Holdings, Inc. (“NJOY Transaction”) in the expected manner or timeframe, if at all, including due to the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States. In 2025, we recorded impairments of the value of the goodwill and other intangible assets within our e-vapor reporting unit as a result of these orders and our expectation that effective enforcement against illicit flavored disposable e-vapor products would occur more gradually than initially anticipated. Other factors that could negatively impact our ability to realize the expected benefits of the NJOY Transaction in the expected manner or timeframe, if at all, including due to include (i) our failure to receive or maintain regulatory authorizations, authorizations; (ii) changes in adult tobacco nicotine consumer preferences, preferences; (iii) our failure to comply with regulatory requirements, requirements; (iv) prevailing economic, market, regulatory or business conditions, or changes in such conditions negatively affecting our business and our plans with respect to the e-vapor category, category and (v) the outcome of any current or future legal proceeding or investigation related to the NJOY Transaction or Transaction, NJOY or its products and the occurrence of any event requiring us to write down the value of NJOY’s goodwill or intangible assets, or both, due to impairment. For example, in January 2025, in a patent lawsuit adjudicated before the ITC, the ITC imposed a ban on the importation of NJOY ACE into the United States and the sale and marketing of NJOY ACE products previously imported into the United States. If the ban on the importation into the United States and the sale and marketing of NJOY ACE becomes effective, it could have a material adverse effect on our ability to realize the anticipated benefits of the NJOY Transaction. products.
Source: Item 1A, 10-K 0000764180-26-000017 vs Item 1A, 10-K 0000764180-25-000019
MD&A 184 words changed in this paragraph; it is 52% similar to last year's version.
(in millions of dollars, except per share data) Earnings before Income Taxes Provision for Income Taxes Net Earnings Diluted EPS 2025 Reported $ 9,389 $ 2,442 $ 6,947 $ 4.12 NPM Adjustment Items (20) (5) (15) (0.01) Acquisition and disposition-related items 76 10 66 0.04 Asset impairment, exit and implementation costs 2,184 263 1,921 1.14 Tobacco and health and certain other litigation items 58 14 44 0.03 Amortization of intangibles 132 22 110 0.06 ABI-related special items 95 20 75 0.04 Cronos-related special items (5) — (5) — Income tax items — (5) 5 — 2025 Adjusted for Special Items $ 11,909 $ 2,761 $ 9,148 $ 5.42 2024 Reported $ 13,658 $ 2,394 $ 11,264 $ 6.54 NPM Adjustment Items (27) (7) (20) (0.01) Acquisition, disposition Acquisition and integration-related disposition-related items (2,527) (665) (1,862) (1.08) Asset impairment, exit and implementation costs 422 107 315 0.18 Tobacco and health and certain other litigation items 101 25 76 0.04 Amortization of intangibles 139 24 115 0.07 ABI-related special items 2 — 2 — Cronos-related special items 18 3 15 0.01 Income tax items — 969 (969) (0.56) 2024 Adjusted for Special Items (1) $ 11,647 11,786 $ 2,826 2,850 $ 8,821 8,936 $ 5.12 2023 Reported $ 10,928 $ 2,798 $ 8,130 $ 4.57 NPM Adjustment Items (50) (12) (38) (0.02) Acquisition, disposition and integration-related items 35 9 26 0.01 Tobacco and health and certain other litigation items 430 107 323 0.18 Loss on disposition of JUUL equity securities 250 — 250 0.14 ABI-related special items 89 19 70 0.03 Cronos-related special items 29 — 29 0.02 Income tax items — (32) 32 0.02 2023 Adjusted for Special Items $ 11,711 $ 2,889 $ 8,822 $ 4.95 5.19
Source: Item 7, 10-K 0000764180-26-000017 vs Item 7, 10-K 0000764180-25-000019
Accounting Policies 147 words changed in this paragraph; it is 70% similar to last year's version.
▪Investments in Equity Securities: Investments in equity securities in which we have the ability to exercise significant influence over the operating and financial policies of the investee are accounted for under the equity method of accounting or the fair value option. The election of the fair value option is irrevocable and is made on an investment by investment basis. We elected to account for our investments in ABI and Cronos under the equity method of accounting. Our share of equity (income) losses and other adjustments associated with these investments are included in (income) losses from investments in equity securities in our consolidated statements of earnings. We report the carrying value for each of our investments in ABI and Cronos in investments in equity securities on our consolidated balance sheets. We report equity method investments accounted for under the equity method of accounting at cost and adjust these investments each period for our share of (income) losses and dividends paid, if any. We report our share of ABI’s and Cronos’s results using a one-quarter lag because results are not available in time for us to record them in the concurrent period. At the end of each reporting period, we review our investments accounted for under the equity method of accounting for impairment by comparing the fair value of each of our investments to their carrying value. If the carrying value of an investment exceeds its fair value and we determine that the loss in value is other than temporary, we consider the investment impaired, reduce its carrying value to its fair value and record the impairment in our consolidated statements of earnings in the period identified. We use certain factors to make this determination including (i) the duration and magnitude of the fair value decline, (ii) the financial condition and near-term prospects of the investee and (iii) our intent and ability to hold our investment until recovery to its carrying value.
Source: Item 8, Note 2 – Summary of Significant Accounting Policies, 10-K 0000764180-26-000017 vs Item 8, Note 2 – Summary of Significant Accounting Policies, 10-K 0000764180-25-000019
Every change, by type
Sentences and paragraphs of MO's Risk Factors and MD&A, 10-K 2026-02-25 against 10-K 2025-02-26.
Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
Additional price competition has resulted from diversion into the United States market of cigarettes intended for sale outside the United States, diversion of tobacco products intended for sale in one taxing jurisdiction within the United States into another taxing jurisdiction, the sale of counterfeit cigarettes by third parties, the sale of cigarettes by third parties over the Internet and by other means designed to avoid collection of applicable taxes and imports of foreign lower-priced brands.
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AddedRisk Factors
Tobacco products imported to the United States are subject to the same federal excise tax as those manufactured domestically. Manufacturers of tobacco products imported to the United States can receive refunds of certain duties, taxes and fees paid on those products when offsetting volumes of the same or substantially similar products are subsequently exported out of the United States. The program that allows for these refunds is referred to as “duty drawback.” If PM USA is unable to realize duty drawback to the same extent as other manufacturers, we may be at a competitive disadvantage with respect to our ability to invest in the long-term growth of our core tobacco businesses and contribute to the strategic growth of our innovative nicotine product portfolio.
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AddedRisk Factors
Lengthy and unpredictable regulatory review periods complicate efforts to strategize and plan with respect to commercialization of new products, and we cannot predict or influence the speed with which the FDA reviews pre-market tobacco applications (“PMTA”). Our operating companies may decide to commercialize products that have not received marketing granted orders from the FDA if the operating company submitted a PMTA with respect to any such product in compliance with the FSPTCA and the FDA failed to issue a marketing order within the statutory review period. It is possible that the FDA may bring an enforcement action relating to commercialized products for which a PMTA has been pending longer than the statutory review period.
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AddedRisk Factors
PM USA imports cigarettes manufactured outside the United States for sale domestically, and PM USA has entered into strategic commercial relationships to manufacture cigarettes in the United States for export to third parties for sale in international markets. If PM USA is unable to maintain, expand upon or enter into new relationships of this type, it may hinder PM USA’s ability to increase the efficiency of its cigarette manufacturing operations, develop capabilities needed to comply with various international product and other standards and invest in the long-term growth of our core tobacco businesses and the strategic growth of our innovative nicotine product portfolio.
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AddedRisk Factors
finished product, raw materials and component parts and services in a timely manner or at all. If we are unable to identify alternate sources of raw materials, ingredients and component parts for our operating companies’ products, we could be exposed to supply risk.
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AddedRisk Factors
In 2025, we recorded impairments of the values of the goodwill and other intangible assets within our e-vapor reporting unit as a result of the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE into the United States and our expectation that effective enforcement against illicit flavored disposable e-vapor products would occur more gradually than initially anticipated. If we experience unfavorable outcomes with respect to litigation proceedings (including actions alleging patent infringement), the discount rate used to estimate the fair values of the goodwill and other intangible assets within our e-vapor reporting unit increases or any of the judgments or assumptions we made regarding the future state of the e-vapor category and NJOY’s business fail to materialize, we could record additional non-cash impairments of our e-vapor reporting unit goodwill in future periods. The judgments and assumptions we made regarding the future state of the e-vapor category and NJOY’s business include the (i) timing and extent of effective enforcement against illicit flavored disposable e-vapor products; (ii) timing and likelihood of regulatory authorizations of e-vapor products, including of NJOY’s products; (iii) timing of the commercialization of NJOY e-vapor products in the United States; (iv) long-term growth of the e-vapor category; and (v) conversion rates of illicit flavored disposable e-vapor consumers to FDA-authorized e-vapor products and, specifically, NJOY’s e-vapor products. Fair value calculations are sensitive to changes in these judgments and assumptions, some of which relate to broader macroeconomic conditions and governmental actions outside of our control.
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RemovedRisk Factors
reject the ITC’s decision. If the Office of the U.S. Trade Representative does not reject the ITC’s decision, the restrictions will take effect on March 31, 2025 or earlier if the Trade Representative notifies the ITC of approval before the 60 days elapse.
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedRisk Factors
We monitor several factors that could impact the carrying value of our e-vapor reporting unit’s goodwill and related definite-lived intangible assets. Increasing sales of illicit flavored disposable e-vapor products and the lack of meaningful enforcement against these products have negatively impacted the volume growth of NJOY’s pod-based e-vapor products. Additionally, in January 2025, in a patent lawsuit adjudicated before the ITC, the ITC imposed bans on the importation of NJOY ACE into the United States and the sale and marketing of NJOY ACE products previously imported into the United States. If the bans on the importation into the United States and the sale and marketing of NJOY ACE become effective or continued illicit e-vapor product sales or other factors result in a significantly unfavorable long-term outlook for NJOY’s volume growth rates versus our projections used to estimate the fair value, either development could result in a non-cash impairment of our e-vapor reporting unit’s goodwill or related definite-lived intangible assets, or both, in future periods.
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RemovedRisk Factors
In October 2024, we announced the multi-phase Initiative, through which we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.
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RemovedRisk Factors
USA removed the IQOS devices, Marlboro HeatSticks and any infringing components from the marketplace. We assigned the U.S. commercialization rights to the IQOS System to PMI in April 2024. In a separate patent lawsuit brought by JUUL, the ITC imposed similar restrictions on NJOY ACE. If the ban on the importation into the United States and the sale and marketing of NJOY ACE becomes effective, it could have a material adverse effect on our business, our valuation of NJOY’s assets and our plans with respect to the e-vapor category.
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedRisk Factors
The actions and inaction of regulators, including the FDA, can result in competitive challenges. For example, unpredictable and lengthy regulatory review periods complicate efforts to strategize and plan with respect to commercialization of new products, and we cannot
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedRisk Factors
protocols, backup systems and business continuity plans, maintenance of security policies and procedures, monitoring of networks and systems, and third-party risk management.
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedRisk Factors
2020 and did not pay its interim 2020 dividend that would have been paid in the fourth quarter of 2020, which resulted in a reduction of cash dividends we received from ABI.
Read it in 10-K 2025-02-26 at sec.gov ↗
RewordedRisk Factors
We may not be able to realize the expected benefits of the NJOY Transaction in the expected manner or timeframe, if at all, including due to failure to receive or maintain regulatory authorizations, changes in adult tobacco consumer preferences, failure to comply with regulatory requirements, (iv) prevailing economic, market, regulatory or business conditions, or changes in such conditions negatively affecting our business and our plans with respect to the e-vapor category, category and (v) the outcome of any current or future legal proceeding or investigation related to the NJOY Transaction or Transaction, NJOY or its products and the occurrence of any event requiring us to write down the value of NJOY’s goodwill or intangible assets, or both, due to impairment. products.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Our inability failure to successfully counter compete effectively, including as a result of litigation settlement obligations, the effects impacts of illicit trade in tobacco nicotine products, including e-vapor products, the price differentials between premium and discount brands and our inability to realize available tax advantages, could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision. position.
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RewordedRisk Factors
These factors include (i) receipt of regulatory authorizations, (ii) prevailing economic, market, regulatory or business conditions, or changes in such conditions, negatively affecting the parties or their plans for future collaboration and partnerships, parties, (iii) changes in market or other conditions resulting in unanticipated delays in the design and development of future products or the commencement of test launches, (iv) the outcome of any legal proceedings or investigations that may be instituted against the parties or others related to the joint venture, (v) changes in the preferences of U.S. adult tobacco consumers, nicotine consumers and (vi) the failure to meet commercialization milestones and (vii) the ability of the parties to enter into future partnerships on terms acceptable to both parties and in the expected manner or timeframe, if at all. milestones.
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RewordedRisk Factors
For example, the inability of due to inflationary pressures and other adverse macroeconomic factors, our operating companies may be unable to sufficiently increase the prices of their premium products to offset volume declines from consumers down-trading to lower-priced competitive brands or moving across tobacco categories could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision. nicotine product categories.
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RewordedRisk Factors
For example, in 2020, as a result of the uncertainty, volatility and impact of the COVID-19 pandemic on ABI’s business, ABI reduced by 50% its final 2019 dividend paid in the second quarter of 2020 and did not pay its interim 2020 dividend that would have been paid in the fourth quarter of 2020, which resulted in a reduction of cash dividends we received from ABI.
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RewordedRisk Factors
For example, the This inability of our operating companies to sufficiently increase the product prices of their premium products to offset volume declines from consumers down-trading to lower-priced competitive brands or moving across tobacco categories could have a material adverse effect on our business, results of operations, cash flows or financial position and our ability to achieve our Vision.
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RewordedRisk Factors
In response, there has been an increase in The criteria by which third-party providers of assessments and ratings to satisfy investor demand for measurement of corporate responsibility performance, and the criteria by which these third parties measure such performance may vary or change over time.
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RewordedRisk Factors
In addition to the outcomes discussed above, actions and inaction by the FDA and other federal, state or local governments or agencies can (i) impact the adult tobacco nicotine consumer acceptability of or access to tobacco nicotine products (for example, through nicotine or constituent limits or menthol or other flavor bans), (ii) limit adult tobacco nicotine consumer choices, (iii) restrict communications to adult tobacco nicotine consumers, (iv) restrict the ability to differentiate tobacco nicotine products, (v) impose additional manufacturing, labeling or packaging requirements, (vi) interrupt manufacturing or otherwise significantly increase the cost of doing business, (vii) result in increased illicit trade in tobacco nicotine products, (viii) restrict or prevent the use of specified tobacco nicotine products in certain locations or the sale of tobacco nicotine products by certain retail establishments, (ix) require the recall of tobacco nicotine products due to a determination relating to product contamination or (x) otherwise require the removal of tobacco nicotine products from the marketplace (for example, due to a determination that one or more tobacco nicotine products fail to satisfy the statutory requirements for substantial equivalence, must proceed through the pre-market review process or must be removed from the marketplace for the protection of public health).
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
We may not be able to enter into attractive business relationships or execute and complete strategic transactions on favorable terms or at all, and any such relationships or transactions may not improve our competitive position or have the intended financial outcomes. all.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
There has been a heightened focus Focus from investors and other stakeholders on corporate responsibility, including with respect to environmental, social and governance matters. matters, has resulted in investor demand for measurement of corporate responsibility performance.
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RewordedRisk Factors
In a patent lawsuit adjudicated before the ITC, the ITC banned imposed bans on the importation of IQOS devices, Marlboro HeatSticks and component parts NJOY ACE into the United States and the our sale and marketing of any such NJOY ACE products previously imported into the United States.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
For example, PLUS oral nicotine pouch products, and we have plans to commercialize next generation additional on! and NJOY products once regulatory authorizations are received. products.
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AddedMD&A
Throughout 2025, U.S. adult nicotine consumers faced persistent inflationary pressures on discretionary income, with lower-income consumers particularly affected. Inflation remained above the Federal Reserve’s 2% target, and elevated prices for essentials such as groceries and housing continued to constrain spending, prompting many low-income earners to cut back and rely more heavily on credit. Gas prices trended downward as expected, with the most notable improvement seen in December when the average price fell to $2.89 per gallon, bringing the average in the fourth quarter of 2025 to approximately $3.00 per gallon. Meanwhile, tariffs introduced earlier in the year steadily increased over recent months, weighing on consumer confidence and adding headwinds to discretionary spending. While we have not observed a material impact on adult nicotine consumer purchasing behavior as a result of tariffs, we continue to closely monitor the additional pressure that tariff-related price increases may exert. In addition, we are monitoring other effects of tariffs on our businesses, including the price, availability and quality of tobacco, raw materials, ingredients and component parts used to manufacture our operating companies’ products. We do not expect tariffs to have a material impact on our costs in 2026 based on presently available information.
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AddedMD&A
innovative nicotine products, such as e-vapor products and oral nicotine pouches. The U.S. nicotine pouch category continued to grow throughout the fourth quarter of 2025 to 56.9% of the U.S. oral tobacco category, an increase of 10.4 share points versus the fourth quarter of 2024. When adjusted for trade inventory movements, smokeable products segment’s domestic cigarette shipment volume declined by an estimated 7% in the fourth quarter of 2025 versus the fourth quarter of 2024. We estimate that, when adjusted for trade inventory movements and other factors, total estimated domestic cigarette industry volume declined by 6.5% in the fourth quarter of 2025 versus the fourth quarter of 2024. In the third quarter of 2025, we estimated the industry decline rate to be 8% versus the third quarter of 2024. We believe that the 1.5 percentage points reduction in the domestic cigarette industry volume decline rate in the current quarter was primarily due to illicit flavored disposable e-vapor product growth moderating slightly in 2025 as compared to the prior year. We have closely monitored this trend and its impact on cigarette industry decline rates. Based on our latest data, we are updating our cigarette category volume decomposition. We now estimate that cross-category movement, primarily driven by illicit flavored disposable e-vapor products, contributed approximately 2% to 3% to the cigarette industry volume decline during 2025 versus our prior estimate of approximately 3% to 4%. As innovative smoke-free products evolve to better address the preferences of adult nicotine consumers, these consumers continue to transition from cigarettes and MST products to innovative smoke-free products, which has negatively impacted the sales volumes of our operating companies’ cigarette and MST products.
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AddedMD&A
Product assortment, regulation and enforcement continue to evolve in the e-vapor category. Flavored disposable e-vapor products have continued driving growth in the e-vapor category. We estimate that flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, represent approximately 70% of the e-vapor category. In response to the proliferation of illicit flavored disposable e-vapor products, states and the federal government have taken various regulatory and enforcement actions. For example, the FDA and U.S. Customs and Border Protection have made it more difficult to import properly declared illicit e-vapor products, seized unauthorized e-vapor products and issued warning letters to importers. However, although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of nicotine products requiring FDA review for which no PMTAs have been submitted have allowed such products to continue to proliferate in the market. We expect that effective enforcement against illicit flavored disposable e-vapor products will occur more gradually than initially anticipated. As a result, in connection with the preparation of our financial statements for the year ended December 31, 2025, we recorded non-cash impairments of our e-vapor reporting unit goodwill and definite-lived intangible assets. For further discussion, see Note 4. Goodwill and Other Intangible Assets, net. (“Note 4”).
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AddedMD&A
Additionally, we continue to see increased illicit activity across multiple nicotine categories, including nicotine pouch products and cigarettes. Throughout 2024 and 2025, traditional tobacco retailers began to carry various synthetic oral nicotine pouch products. We continue to track the overall dynamics across multiple nicotine categories as well as competitive threats to our brands.
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AddedMD&A
(1) Prior period amounts have been recast to conform with current period presentation for amortization of intangibles that were not previously identified as special items and that are now excluded from our adjusted financial measures. See Non-GAAP Financial Measures below.
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AddedMD&A
(1) Prior period amounts have been recast to conform with current period presentation for amortization of intangibles that were not previously identified as special items and that are now excluded from our adjusted financial measures. See Non-GAAP Financial Measures below.
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AddedMD&A
Beginning in the first quarter of 2025, we changed our treatment of our amortization of intangibles that we previously included in our adjusted results, including adjusted net earnings and adjusted diluted EPS, and now treat this expense as a special item and exclude it from our adjusted results. Amortization of intangibles is significantly impacted by the timing, frequency and size of acquisitions, each with unique facts and circumstances, which could result in amortization charges that could be inconsistent in size and timing. Net revenues generated from these definite-lived intangible assets during the periods presented, if applicable, are included in our adjusted financial measures.
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AddedMD&A
▪Revenue Recognition: We define net revenues as revenues, which include excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives. These consumer incentives consist primarily of price promotions, substantially all of which are made to retailers to incent the promotion of certain product offerings in select geographic areas. These price promotions include estimates of variable consideration and require estimates and judgments based principally on shipment volume, retail acceptance and compliance, redemption and utilization. Actual payments will differ from estimated payments to the extent actual results differ from estimated assumptions. We reflect differences between actual and estimated payments in the period in which actual payments become known, which have not been material to our financial position, results of operations or operating cash flows. We record these expected payments for price promotions as a reduction to revenues upon shipment of goods to customers in our consolidated statements of earnings and in accrued marketing liabilities on our consolidated balance sheets.
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AddedMD&A
In determining the estimated fair values of our reporting units and indefinite-lived intangible assets in 2025, 2024 and 2023, we made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, perpetual growth rates, discount rates and scenario weightings, as applicable.
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AddedMD&A
After recording the impairment charge in the fourth quarter of 2025 (discussed below), the carrying value of the e-vapor reporting unit’s net assets (including the effect of intercompany debt), approximated its estimated fair value. If the assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business discussed above fail to materialize as anticipated, if we experience unfavorable outcomes with respect to litigation proceedings (including actions alleging patent infringement), or if the discount rate used to estimate the fair value increases, we could have additional non-cash impairments of our e-vapor reporting unit goodwill in future periods, which could be material. A hypothetical 1% increase in the discount rate used to estimate the fair value of the e-vapor reporting unit would have resulted in an additional goodwill impairment charge of approximately $150 million during 2025.
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AddedMD&A
During the fourth quarter of 2025, we determined that the long-lived assets in the e-vapor reporting unit may not be fully recoverable. As a result, we first performed a recoverability test of the e-vapor definite-lived intangible assets. We determined that the asset group was not recoverable because the estimated undiscounted cash flows, including an assumed terminal‑year EBITDA multiple, were less than its carrying value. Second, we measured the impairment loss by comparing the carrying value of the definite-lived intangible assets, consisting of developed technology and trademarks, to their estimated fair values. These fair values were determined using an income approach, specifically the relief from royalty method, which estimates the value of an intangible asset by calculating the present value of the hypothetical royalty payments a company avoids by owning the asset rather than licensing it from a third party. In performing this analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, price, revenue, income, operating margins, scenario weightings, discount rates, royalty rates, obsolescence rates and economic lives. As a result, we recorded a non-cash, pre-tax impairment of these assets of $970 million, which we recorded in our consolidated statement of earnings for the year ended December 31, 2025.
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AddedMD&A
Following the impairment of these e-vapor definite-lived intangible assets, we performed our annual impairment test of goodwill, utilizing the revised carrying amount of the e-vapor reporting unit after reflecting the e-vapor definite-lived intangible assets impairment charges. Our test indicated that the estimated fair value of the e-vapor reporting unit was below its carrying value, resulting in a non-cash goodwill impairment of $285 million, which we recorded in our consolidated statement of earnings for the year ended December 31, 2025. The impairments of the e-vapor definite-lived intangible assets and the e-vapor reporting unit goodwill were due primarily to lower projected volume and revenue as a result of the impact of estimates regarding protracted ineffective enforcement against illicit flavored disposable e-vapor products. After this e-vapor goodwill impairment charge, the carrying value of e-vapor goodwill as of December 31, 2025 was $610 million.
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RemovedMD&A
▪Grow U.S. smoke-free volumes by at least 35% from our 2022 base of 800 million units by 2028 (see Operating Results by Business Segment); and
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedMD&A
▪Approximately double our U.S. smoke-free net revenues to $5 billion by 2028 from our 2022 base, with $2 billion sourced from innovative smoke-free products (see Operating Results by Business Segment).
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedMD&A
In October 2024, we announced a multi-phase Initiative designed to modernize our ways of working as we work towards achieving our Vision and 2028 Goals. Through the Initiative, we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes. We expect the design and detailed plans for all phases of the Initiative to be substantially complete in early 2026. As part of the Initiative, we established an ABS organization within ALCS. This organization will be responsible for driving efficiency and process improvement across our companies in partnership with external service providers.
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RemovedMD&A
U.S. adult tobacco consumers remained under pressure throughout 2024 largely due to the compounding effects of high prices exceeding overall wage growth and historically high levels of consumer credit and credit card delinquency rates. Although inflation rates stabilized in 2024, increased prices continued to pressure adult tobacco consumers. These pressures influenced the discount segment retail share growth within the cigarette industry year-over-year. We will continue to monitor conditions that impact adult tobacco consumer discretionary income and overall purchasing behaviors, including overall tobacco product expenditures, mix between premium and discount brand purchases and adoption of smoke-free products. We expect discretionary income pressures will continue to influence adult tobacco consumers’ purchase behaviors in 2025.
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RemovedMD&A
Product assortment, regulation and enforcement continue to evolve in the e-vapor category. For the 12 months ended December 31, 2024, we estimate the e-vapor category grew by approximately 30% versus the prior 12-month period, driven by the growth of illicit
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedMD&A
flavored disposable e-vapor products. We estimate that illicit products now represent more than 60% of the e-vapor category. In response to the proliferation of illicit disposable e-vapor products, states and the federal government took various regulatory and enforcement actions throughout the year in 2024, but these actions have failed to curb this trend. Select states have established e-vapor product registries based on PMTA submissions or MGOs. Additionally, we continue to see increased illicit activity across multiple tobacco categories, including nicotine pouch products and cigarettes.
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RemovedMD&A
ABI’s business is exposed to foreign exchange rate fluctuations, inflation, commodity price movements and other macroeconomic factors that could impact financial performance from time to time. We will continue to monitor these conditions and other factors as they could affect our equity earnings, our other comprehensive earnings/losses and the dividends that we receive from ABI, and the fair value of our investment in ABI. See Note 8 for additional information on our investment in ABI.
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RemovedMD&A
▪Revenue Recognition: Our businesses generate substantially all of their revenue from sales contracts with customers. Our businesses define net revenues as revenues, which include excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives. Our businesses exclude from the transaction price sales taxes and value-added taxes imposed at the time of sale.
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RemovedMD&A
Our businesses record sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction to revenues (a portion of which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of a period) based principally on historical volume, utilization and redemption rates. We include expected payments for sales incentives in accrued marketing liabilities on our consolidated balance sheets.
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RemovedMD&A
For further discussion, see Note 4. Revenues from Contracts with Customers to our consolidated financial statements in Item 8.
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RemovedMD&A
While the estimated fair value of our e-vapor reporting unit exceeded its carrying value by approximately 28% ($0.3 billion), we continue to monitor several factors that could impact the carrying value of our e-vapor reporting unit’s goodwill, including the following:
Read it in 10-K 2025-02-26 at sec.gov ↗
RemovedMD&A
▪Altria and certain of our affiliates, including NJOY, are defendants in lawsuits alleging patent infringement based on the sale of NJOY ACE in the United States. On January 29, 2025, the ITC issued its final determination regarding the complaint filed by JUUL against Altria and certain of our affiliates, including NJOY, finding that NJOY ACE infringes on JUUL’s patents and issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States. The ITC’s determination is currently under a 60-day review period by the Office of the United States Trade Representative which could reject the ITC’s determination. If the Trade Representative does not affirmatively reject the ITC’s determination, the determination will automatically become final and the ITC’s orders will take effect on March 31, 2025, or earlier if the Trade Representative notifies the ITC of approval before the 60 days elapse. The final exclusion order and cease-and-desist orders can be appealed to the U.S. Court of Appeals for the Federal Circuit, but the final exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE would likely not be stayed during the pendency of such an appeal. We continue to vigorously defend this litigation, including our motion filed in February 2025 seeking reconsideration of the ITC’s determination on one of the four patents as discussed in Item 3. Legal Proceedings of this Form 10-K (“Item 3”).
Read it in 10-K 2025-02-26 at sec.gov ↗
RewordedMD&A
(in millions of dollars, except per share data) Earnings before Income Taxes Provision for Income Taxes Net Earnings Diluted EPS 2025 Reported $ 9,389 $ 2,442 $ 6,947 $ 4.12 NPM Adjustment Items (20) (5) (15) (0.01) Acquisition and disposition-related items 76 10 66 0.04 Asset impairment, exit and implementation costs 2,184 263 1,921 1.14 Tobacco and health and certain other litigation items 58 14 44 0.03 Amortization of intangibles 132 22 110 0.06 ABI-related special items 95 20 75 0.04 Cronos-related special items (5) — (5) — Income tax items — (5) 5 — 2025 Adjusted for Special Items $ 11,909 $ 2,761 $ 9,148 $ 5.42 2024 Reported $ 13,658 $ 2,394 $ 11,264 $ 6.54 NPM Adjustment Items (27) (7) (20) (0.01) Acquisition, disposition Acquisition and integration-related disposition-related items (2,527) (665) (1,862) (1.08) Asset impairment, exit and implementation costs 422 107 315 0.18 Tobacco and health and certain other litigation items 101 25 76 0.04 Amortization of intangibles 139 24 115 0.07 ABI-related special items 2 — 2 — Cronos-related special items 18 3 15 0.01 Income tax items — 969 (969) (0.56) 2024 Adjusted for Special Items (1) $ 11,647 11,786 $ 2,826 2,850 $ 8,821 8,936 $ 5.12 2023 Reported $ 10,928 $ 2,798 $ 8,130 $ 4.57 NPM Adjustment Items (50) (12) (38) (0.02) Acquisition, disposition and integration-related items 35 9 26 0.01 Tobacco and health and certain other litigation items 430 107 323 0.18 Loss on disposition of JUUL equity securities 250 — 250 0.14 ABI-related special items 89 19 70 0.03 Cronos-related special items 29 — 29 0.02 Income tax items — (32) 32 0.02 2023 Adjusted for Special Items $ 11,711 $ 2,889 $ 8,822 $ 4.95 5.19
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
For the Twelve Months Ended December 31, 2024 2025 (in millions) Consolidated net earnings $ 11,264 6,947 Interest and other debt expense, net 1,037 1,079 Provision for income taxes 2,394 2,442 Depreciation and amortization 286 266 EBITDA 14,981 10,734 (Income) loss losses from investments in equity securities and noncontrolling interests, net (652) (510) Dividends from less than 50% owned affiliates 139 Gain on the sale of IQOS System commercialization rights (2,700) 208 Asset impairment and exit costs 389 978 Impairment of goodwill 1,158 Fair value adjustment for NJOY Transaction contingent payments 25 Consolidated EBITDA $ 12,157 12,593 Current portion of long-term debt $ 1,527 1,569 Long-term debt 23,399 Total 24,140 Debt $ 24,926 Total 25,709 Debt / Consolidated net earnings 2.2 Total 3.7 Debt / Consolidated EBITDA 2.1 2.0
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
We determined As discussed in Note 4, the estimated fair value of the Skoal trademark as of June 30, 2024, was below its carrying value and recorded interim impairment assessment resulted in a non-cash, pre-tax non-cash goodwill impairment of $354 $873 million during the second first quarter of 2024, 2025, which was recorded is recognized in our consolidated statement of earnings for the year ended December 31, 2024. 2025.
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RewordedMD&A
The May 2016 deeming regulations amended As required by the Final FSPTCA, the FDA has promulgated a wide range of advertising and promotion restrictions for cigarettes and smokeless tobacco(1) products (the “Final Tobacco Marketing Rule Rule”), which the FDA has subsequently amended to expand specific provisions to all tobacco products, including cigars, pipe tobacco and e-vapor and oral nicotine products containing tobacco-derived nicotine or other tobacco derivatives. derivatives such as synthetic nicotine.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
This decrease increase was due primarily to lower net revenues, payments for certain transferable income tax credits, higher State Settlement Agreements, litigation payments and excise taxes, and a portion of the NJOY contingent payments in 2024 ($140 million), partially offset by lower net revenues and higher payments for (i) federal excise taxes and (ii) Statement Settlement Agreements, due primarily to lower smokeable products shipment volume. certain transferable income tax credits.
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RewordedMD&A
Reported OCI increased $151 $163 million (1.4%), (1.5%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges and lower marketing, administration tobacco and research costs ($56 health and certain other litigation items ($15 million), partially offset by lower shipment volume ($1,648 million), higher per unit settlement charges and manufacturing costs ($198 million) and 2024 exit costs related to the Initiative. ($1,651 million).
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Reported OCI decreased $273 increased $379 million (15.9%), (26.2%), due primarily to a non-cash impairment of the Skoal trademark ($354 million), lower shipment volume and a higher percentage of on! shipment volume relative to MST ($125 million), partially offset by million) in 2024, higher pricing, which includes higher promotional investments. investments, partially offset by lower volume/mix ($222 million) and higher costs ($17 million).
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RewordedMD&A
The These cumulative cost savings exclude our estimated total pre-tax charges for the Initiative’s initial Initiative of approximately $175 million, updated from our prior estimate of approximately $125 million, as a result of finalizing the plans for all phases of approximately $100 million to $125 million, the Initiative, which we will treat as special items and exclude from our adjusted diluted EPS.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Operating income decreased $306 $1,342 million (2.7%), (11.9%), due primarily to lower OCI (which includes the net impact of non-cash impairments of the e-vapor reporting unit goodwill and definite-lived intangible assets in our e-vapor products segment in 2025 and a non-cash impairment of the Skoal trademark in our oral tobacco product segment and costs related to the Initiative), in 2024), partially offset by lower general corporate expenses.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
For the Years Ended December 31, CAGR 2024 2025 2022 Reported diluted EPS $ 6.54 4.12 $ 3.19 43.2% 8.9% NPM Adjustment Items (0.01) (0.03) Acquisition, disposition Acquisition and integration-related disposition-related items (1.08) 0.04 — Asset impairment, exit and implementation costs 0.18 1.14 — Tobacco and health and certain other litigation items 0.04 0.03 0.05 Amortization of intangibles 0.06 0.03 JUUL changes in fair value — 0.81 ABI-related special items — 0.04 1.12 Cronos-related special items 0.01 — 0.10 Income tax items (0.56) — (0.40) Adjusted diluted EPS (1) $ 5.12 5.42 $ 4.84 2.9% 4.87 3.6%
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of certain product categories that violate the law, including certain disposable and flavored e-vapor products, certain oral nicotine pouch tobacco products and products targeted to minors, requiring FDA review for which no PMTA has been submitted have allowed such products to proliferate on the market.
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RewordedMD&A
Operating Results For the Years Ended December 31, (in millions) 2025 2024 2023 Net revenues $ 20,485 $ 21,204 $ 21,756 Excise taxes (3,042) (3,469) (3,869) Revenues net of excise taxes $ 17,443 $ 17,735 $ 17,887 Reported OCI $ 10,984 $ 10,821 $ 10,670 NPM Adjustment Items (29) (24) (29) Asset impairment, exit and implementation costs 49 60 — Tobacco and health and certain other litigation items 55 70 69 Adjusted OCI $ 11,064 $ 10,922 $ 10,710 Reported OCI margins (1) 63.0 % 61.0 % 59.7 % Adjusted OCI margins (1) 63.4 % 61.6 % 59.9 %
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
However, various Various other increases are under consideration or have been proposed.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
A majority of Many states currently tax MST using an ad valorem method, which is calculated as a percentage of the price of the product, typically the wholesale price.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
For example, one can of oral nicotine pouches, irrespective of the number of pouches in the pack, can, is assumed to be equivalent to one can or pack of MST.
Read it in 10-K 2026-02-25 at sec.gov ↗
